The company attributed political instability and weak economy for the slump.
Chief executive Stuart Bird said recent cabinet reshuffles which saw the dismissal of Pravin Gordhan as the finance minister and the subsequent downgrades to junk status forced consumers to hold back on spending.
Bird described the situation as “a very difficult trading period”.
However, the company maintained its full-year dividend, which has not declined in the past 31 years, at 667c a share, with the final dividend of 438.8c per share - up 4.7 percent compared to the corresponding 2016 period.
Diluted headline earnings a share declined 10 percent to 887.9c from the previous year.
The company said despite the poor trading environment, it should have achieved better relative performance over the past year. Total revenue increased 0.7 percent to R19.8 billion, with retail sales declining 0.5 percent to R18.6 billion. Local online sales continued to perform well and were 13 percent higher.
The group said sales' growth in the fourth quarter was impacted by the Easter holidays in March 2016 and April this year.
Cash sales were level with the previous year, constituting 83.3 percent of total sales. Credit sales were 3.1 percent lower. The group said initiatives introduced as a result of the new credit regulations gained traction in the second half of the year.
The company said any improvement in the consumer environment was likely to be gradual and it would focus on regaining lost market share in the short term.
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However, there were already encouraging signs in the new financial year, with the best sales performances coming from Mr Price Apparel and Miladys, which experienced sales and profit declines last year.
The combined sales growth in these two chains for the eight weeks to May 27 exceeded 10 percent. Net inventories at year-end were 3 percent lower than last year and were generally in better shape, which augured well for future gross margin performance.
The group plans to open 48 stores in the new financial year. “Our major internal projects are focused on enabling growth and will continue to receive the necessary priority,” it said.
The company said it would continue to pursue its international growth strategy and expected to have a clearer view of the potential of the Nigerian and Australian markets by year-end.
Mr Price shares closed 4.24 percent higher at R152.39 on the JSE.